Mkt outperformance intact; like pvt banks: Dipan Mehta

In an interview to CNBC-TV18, Dipan Mehta, member, BSE & NSE says there seem to be no road blocks in sight to stall the market upmove although intution says market needs to correct to stay healthy.

Neither does he see the Q2FY15 GDP number expected tomorrow to be a material event for the market even if it is a bit disappointing. In fact if the number comes in below expectations then it could make a case for RBI to cut interest rates and drive the government to revive growth, he thinks.

Liquidity flows from domestic, FIIs and HNIs have so far kept the momentum going for the market, he adds

When asked to comment on DLF, he says on a fundamental basis it is difficult to value the company and traders should exit the stock on any upswing. Investors on the other hand should keep away from all realty stocks, he advises.

In other stock specific action, he is upbeat on most private sector banks as opposed to PSU banks with an exception of SBI . He thinks the worst is behind for SBI and the management too sounded positive post their Q2 numbers.

From the midcap space he is upbeat on the financials like Bajaj Finance , SKS Microfinance . He is also bullish on some of the FMCG names like Emami ,  Jyothy Laboratories and from the pharma space Torrent Pharma , Cadila Health.

“Within key industries good performers are available at reasonable valuations and with a long-term view these could give 25-30% returns,” says Dipan.

Anuj: First a word on broader market, do you expect the kind of outperformance that we have seen for last month, month and half to continue and if yes then what kind of stocks would you buy now?

A: As we look ahead there seems to be absolutely no roadblocks and intuitively one does feel that a correction should take place, would make the markets more healthy and we keep on worrying about valuations but the flow of liquidity continues to drive stock prices up on the days when the foreign institutional investors (FIIs) are sellers then we are seeing Indian domestic institutions buying. At the same time a lot of high networth investors (HNIs) also are putting their money to work as far as equities are concerned.

On the whole we are in pretty much blue sky kind of scenario over here with politically lot of developments taking place positively. We have a Budget where expectations are going to certainly climb higher and higher considering the statements coming in from there. Globally there is a fair degree of calmness with a lot of important indices getting to new highs.

So, virtually difficult to find any negative reason so my sense is that the outperformance would continue and a correction if at all a serious one would come only if there is a negative newsflow which can impact the sentiment.

Ekta: Wanted to get your sense on two triggers, one, the gross domestic product (GDP) data which is out for tomorrow which is for the Q2 FY15 quarter. It is expected to slowdown from the 5.7 percent that we clocked-in in the Q1, do you think that would be a disappointment for the markets if in case it does come in maybe below the expectations of 5-5.1 percent?

A: I don’t think it is going to be a material event for the market. If it is slightly disappointing then it will make the case for interest rate cut all the more compelling. It may also drive the government to do little bit more to revive the growth. So, I don’t think it is a major event that will move the markets in a significant manner.

In any case 5 percent number has already got discounted and usually these numbers are typically in the 0.1-0.2 percent range as well. So, I am not looking at any major fireworks post announcement of the GDP numbers.

Anuj: The stock of this month has been DLF; that is up 19 percent. Two part question then, one what would you do with DLF and two what does that tell you about the state of the market right now?

A: A lot of movement in DLF has been in conjunction with what developments are taking place. On a fundamental basis it is very difficult to value DLF; it is a complex company.

From an investor viewpoint all I would say is that avoid all real estate stocks DLF included. Typically such swings on the upside are good exit points for retail investors

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